Nouriel Roubini: 'We Are Building The Foundations Of The Next Bubble' (VIDEO)
Despite the EU's newly announced trillion-dollar backstop, Nouriel Roubini, the president of RGE Monitor and the author of the new book "Crisis Economics: A Crash Course in the Future of Finance," hasn't altered his characteristically gloomy outlook on the world economy.
Roubini sat down with Aaron Task and Henry Blodget on Yahoo's Tech Ticker recently and argued that the world is facing a dangerous -- and virtually unprecedented -- near-zero interest rate environment that may precipitate the next bubble. Reiterating a line of argument he's long-held, Roubini said that the global financial system is becoming increasingly prone to meltdowns:
"In practice, we have seen that things that things should have happened once every one hundred years are becoming much more frequent and are much more virulent. The economic cost, job losses, and the fiscal cost of these crises have become larger and larger."
Roubini, however, did acknowledge that there are some indicators of a rallying global economy. Asset prices, however, may very well be significantly overvalued. Here's more from Roubini:
"There is a global economic recovery, I'm not saying its all a bubble," Roubini said. "But when you can borrow everywhere in the world at a zero rate, and you can take leverage, the risk of creating the next asset bubble...that significant risk is rising."
Near-zero interest rates are "defying the laws of gravity" for asset prices around the world. "We are building the foundations of the next bubble that could lead -- not next year, but down the line in the next two or three years -- to the next crisis." Roubini said.